What About Starting My Own Business?

10 Nov 2017

The light once more shone out this week from event number five in the LSBM Lighthouse series of events. We were visited by Pratik Dattani, Director, Federation of Indian Chambers of Commerce and Industry (FICCI) UK (centre), and Lydia Wakefield, Education and Training Manager at The Association of Independent Professionals and the Self-Employed (IPSE) (right of picture). The discussion, which was chaired by Arif Zaman, Deputy Director, Centre for Research and Enterprise at LSBM (left of picture), centred on the topic of entrepreneurship, starting your own business and freelancing.

 

The first speaker, Pratik Dattani, Director, Federation of Indian Chambers of Commerce and Industry (FICCI) began by focusing on some of his findings that he had gleaned from exploring how to create a vibrant entrepreneurial community in India.

The FICCI is India's largest and oldest trade body. They describe themselves in the following terms:

"Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is closely interwoven with India's struggle for independence, its industrialization, and its emergence as one of the most rapidly growing global economies.
 

A non-government, not-for-profit organisation, FICCI is the voice of India's business and industry. From influencing policy to encouraging debate, engaging with policy makers and civil society, FICCI articulates the views and concerns of industry. It serves its members from the Indian private and public corporate sectors and multinational companies, drawing its strength from diverse regional chambers of commerce and industry across states, reaching out to over 250,000 companies.
 

FICCI provides a platform for networking and consensus building within and across sectors and is the first port of call for Indian industry, policy makers and the international business community."

You can find their website here.


In February 2017, the Indian Finance Minister published a report called 'Developing a Startup Ecosystem - Lessons from the UK' that Pratik had written, that explored how to develop entrepreneurship in India by looking at lessons from the UK. 

He pointed out that the UK has the second most vibrant 'tech' start-up community in the world, after the USA. And that on the basis of pure numbers (which can admittedly be misleading, because it doesn't take account of the population) the countries with the most overall start-ups were:

1/ USA
2/ India
3/ China
4/ UK
5/ Canada
6/ Israel
7/ Australia
8/ Germany
9/ France
10/ Brazil

It is interesting to reflect that, according to the report, London saw an increase of 29,000 businesses set up in 2015, a growth rate of 6.95%, accounting for nearly a third of the total businesses in the UK.


The report itself identifies six key ways of creating a startup eco-system, and it is useful to look at the many ways that the UK is business friendly.
 

1/ Accommodative policy from government

This involves such aspects as ease of setting up companies, checking company names and details, legal systems, compliance requirements, tax regimes, investor-friendly policies and infrastructure considerations (such as for example having properly developed railway and underground networks to support the movement of people and products), in addition to any 'direct' government schemes.

So, while the UK may fall down in some ways, as a whole package we fare rather well as a place to do business.


2/ Support from government agencies

This pointed to pro-bono (i.e free!) advice in finding partners and investors from such investment agencies as 'London & Partners'. Also the DIT’s Dealmaker network is a team of 19 successful entrepreneurs in the UK who can help people to setup and expand their businesses. In addition, there is a Global Entrepreneur Programme (GEP) helping overseas entrepreneurs and early-stage technology businesses or startups relocate their business to the UK.


3/ Strong underlying institutional and corporate support 

The fact that London is one of the foremost global hubs for professional and financial services means that best advice and knowledgeable networks is readily available. 

In addition, there are hubs of expertise, such as Canary Wharf for financial services, Nottingham for high-quality men's shoe manufacturing etc that concentrate knowledge and expertise in certain locations that makes it easier to attract staff and finance for certain endeavours in particular areas.


4/ Access to market can manifest in different ways 

The UK is in a perfect timezone to facilitate international business. In addition, there are regular incubator schemes, and such institutions as the Chamber of Commerce and the CBI that can help to facilitate active networking that makes market opportunities more widely known.

There are also practical measures, such as allowing startups to attend exhibitions abroad at discounted rates, due to support from government that can help to get smaller startups to get a foothold in new markets.


5/ Human capital is as important as other infrastructure 

In many ways the two are interlinked. Great places to live also attract people to setup companies and create new businesses. So it is a virtuous circle. Also, the more a place becomes known for its expertise (such as finance in the City of London for example), the easier it becomes to attract talented people.

In addition, good education systems are key, because new, talented people are the engine that drives an economy.


6/ It is important to cultivate an entrepreneurial culture 

This is an area where the USA stands out. Entrepreneurship is seen as not only normal, but something that is to be praised and actively encouraged. 

This is not always true in the UK, as evidenced by a YouGov survey commissioned by Google in 2016, where British teenagers had little interest in starting their own companies. The pollsters found that only 22% of people aged 15-18 believed that they would be likely to start their own business, most seeing it as risky. 

It is that focus on 'risk', rather than the potential 'rewards', that most countries need to look to change.

Of course, this doesn't mean that you have to push a 'Pollyanna' view of setting up your own business! In practice, half of all new startups will close down within five years, and of those that are still in business, most will be at various levels from 'surviving' to 'good cashflows', rather than at Google or Facebook levels of 'fantasy cash'.

In addition, setting up your own business is typically hard work, involves long hours and uncertain cashflows, certainly at the beginning. And even as a business matures, there are no guarantees. 

But there can be big payoffs in terms of creative freedom, doing something that you are passionate about (or can become passionate about once people start handing you money!) And there can be big potential upsides financially speaking.



The second speaker was Lydia Wakefield, Education and Training Manager at The Association of Independent Professionals and the Self-Employed (IPSE).

You can find the IPSE website here.

 

They define themselves in the following terms:

"IPSE, the Association of Independent Professionals and the Self Employed, is the voice of the UK’s self-employed population who make up one in seven people working today. We make sure freelancers, interim managers, consultants and contractors are represented to Government. By producing insightful, hard-hitting research and effective policy campaigns, we fight to create a better environment for the self-employed to run their businesses and ultimately, ensure our economy remains one of the most flexible in the world."

This body of people includes the 2 million freelancers who are currently active in the UK, and Lydia said that in the last 8 years this figure has grown by 46%, which is an amazing growth rate, and testament to the way that the internet and tech landscape has so radically altered since the turn of the century.

Interestingly, Lydia pointed to two particular age demographics that accounted for a large amount of this growth. That was those in the 60+ and 16-29 age categories, with the latter having experienced 66% growth in that period.

One unexpected aspect of this that Lydia pointed to was research from the Institute of Graduate Recruiters that has indicated increased drop-out rates from graduate schemes in the last few years, as younger people are starting up their own businesses, rather than continue down a more traditional 'graduate scheme' route.

It does have to be pointed out however that while this research is interesting, and does point to more opportunities being available, it doesn't necessarily mean that graduate schemes are becoming less attractive options, simply that new options are now opening up in a fast-paced world that may seem to be more attractive for some people.

Lydia made the point that this is a change of focus in peoples minds. Moving from the perspective of from 'Job to Job', to 'Project to Project'. In that perspective there isn't such a thing as a 'Job for Life', so the world becomes more compartmentalised and perhaps a little less orientated around job security.

The largest increase in freelancers that IPSE has seen in the last few years is among Healthcare Professionals, which is interesting, and also perhaps emphasises that while tech startups may get the front page news. That the healthcare sector in the UK is a massive industry (planned spending for the Department of Health in England is approximately £123.8 billion in real terms in 2017/18.)

Lydia spoke about the whole spectrum that freelancing might take, including marketing consultants, wine consultants, forensic scientists, as well as the more 'traditional' creative and technical industries that you may associate with freelancing. And that increasingly markets are niching down, such as social media experts, rather than general marketing consultants. So that consultancy then becomes about going deeper into an area of expertise, rather than wider.

Lydia also emphasised that this wasn't just about 'paying the bills'! It was also about increased job satisfaction. She spoke about a recent report that showed that 84% of those that are freelancers are happy with their jobs, compared to 64% of those in 'regular' employment.

The reasons she gave for this were that people preferred being there own boss, enjoyed choosing which projects to take on, had better work/life balance and the ability to focus on areas of their expertise that interested them most, or which may be more lucrative, or which offered the most freedom or opportunities to travel. The key distinction is choice. When people get to choose what they focus on then that immediately changes their feelings about doing it.

There are of course challenges with freelancing, including tax implications, managing workloads, late payments, not being paid for days off, no holiday pay, legal implications of how you structure your company (IR-35 implications particularly - whether you are classed as employed or a freelancer on longer-term projects you may take on) and others.

IPSE aims to help out with some of the practical elements of these challenges, and you can learn more about the benefits of membership here.

 

Thanks to both Pratik and Lydia for visiting us this week and sharing some of their thoughts about entrepreneurship and freelancing.

You can learn more about our series of interesting events and talks on our Lighthouse page here.

 

Stuart Brown
Media and Content Manager

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