Ever heard the term ‘Growth Entrepreneur’?
Probably not. We’re talking small businesses here, and at its simplest, there’s a train of thought that says you can split them in to two categories: ‘lifestyle’ entrepreneurs, and ‘growth’ entrepreneurs.
According to FSB member, Rob Dixon, it’s the latter that’s key to UK Plc delivering growth and jobs in the years ahead.
Rob, who owns Stockport based Joineryworkshop.com, explains: “Lots of people start their own business and get to the point where they require help. Most people will require assistance as a pre-start, and there’s lots of help out there for them. Often businesses will seek help before they take the leap and become employers – hiring staff, which is a major milestone, and there’s assistance out there for them too that’s quite easy to find.
“But what happens when a firm gets to around the medium size – that’s usually classed as upwards of 49 staff? There’s actually very little assistance. It’s quite often at this point the firm struggles to grow and ‘scale’ up successfully.”
Rob calls this the ‘blockage’ point. The business reaches a point where they need to speculate to accumulate: that’s employing more staff, including a tier of middle management, investing in new equipment, having more robust systems in place such as IT to safeguard the business, and of course, this all needs affordable finance to fund it.
He explains: “Let’s say you’ve hit a £1million turnover. As a business owner you’re probably fairly comfortable, but you can see the potential to grow the business. There are, though, so many disincentives to even begin the process, and they just multiply if you take the plunge.
“For example, health & safety, developing middle management, creating a reliable service infrastructure such as accountants, payroll, IT, recruitment, new premises – so business rates can impact; then you need finance. If you’re a business owner you don’t know what you don’t know, so you need help – and it’s not there.”
Rob has a clear plan on how to remedy this, and is currently seeking audience with decision makers in Greater Manchester to push his solution. Rob wants to see the creation of a ‘Growth Entrepreneur’ (GE) mechanism, enabling money made by a business to be reinvested into the growing company, rather than paid out in tax, thus getting around bank lending problems at a stroke, which is where the problem usually starts.
Registered GEs would have to demonstrate over a 12 month period they have created wealth – that’s tax generated, including employee PAYE and NI – has increased. The GE then gets the value of the increase back to reinvest in the company. The process would continue until £5m turnover is reached.
Adds Rob: “Growth Entrepreneurs need to be a recognised business category, attracting a limited period of special rules and regulations. Germany has a flourishing mid-sized business community, much bigger than here in the UK, and we need to replicate that in order to perform as well economically, especially with Brexit on the horizon. We need more blue sky thinking to encourage that.”