Enterprise Nation

Record figures were announced yesterday by the government department for enterprise. The number of businesses in the UK increased by 212,000 to a record 4.7million. Yet the Federation of Small Business is worried. We want to assure them there’s no need for concern.

Breaking records 

Jonathan Moules reported in the Financial Times that:

“The number of businesses in the UK increased by 212,000 to a record 4.7m in the 12 months to the beginning of last year, according to official figures. The data, compiled by the Department for Business, Enterprise and Regulatory Reform, pre-date the start of the credit squeeze. The research shows that the number of self-employed people is increasing faster than companies and partnerships that employ people.

John Wright, national chairman of the Federation of Small Businesses, said the large number of sole traders was an "immense worry" and showed the damage done by increasing regulation. "It is a huge jump from being self employed to becoming an employer," he said.”

Smashing myths

We don’t share Mr Wright’s concern about the number of sole traders being a worry.

Around 60% of the 212,000 new businesses (127,200) will have been started, and are now growing, from a home base.

Home business owners may not be recruiting full time employees but they are sub-contracting and outsourcing work to partners, suppliers, freelancers and fellow home business owners. This is how we are contributing to the economy.

For the majority of home business owners, ‘growth’ is not about the number of people you employ, it’s about the amount of turnover you generate. It’s about maintaining good profit margins and having the flexibility to work with others on a project by project basis.

That’s just what we do at Enterprise Nation. We are an ambitious business but we don’t want to become a company of 25 people sitting in a shared office. Our vision is to increase turnover, grow the business and expand overseas. We want to do this with a small flexible team of self-employed experts. To me, this is the most sensible way to grow. But it’s not a way that’s being recognised as sensible by the government and some small business groups. 

I asked HR expert Helen Astill about the data, and her opinion on it. This is what she had to say:

“Business owners do get anxious about the additional responsibilities that come with being an employer as there is no longer a ‘magic number’ above which you have to comply with employment legislation – it applies as soon as you take on your first employee.  The trend seems to be to outsource or use service companies to provide much of the support required.  This is particularly the case where businesses are run from home. There’s the added angle that the business owner may be uncomfortable with employees coming to work at their home.”

Helen did go on to advise:

“It is important to make sure that if you use associates or contractors rather than employees in your business that you have agreements drawn up to ensure that everyone knows how the working relationship is intended to work.”

We’ll be hearing more from Helen next week as we take a closer look at the topic of recruiting employees.

In the meantime, back to John Wright of the FSB.

Our message to you John is ‘don’t worry.’

A record rise in the number of business start-ups is a good thing. And if those businesses decide to remain as one man/woman bands and grow by outsourcing work to others, then that’s also a good thing. We should congratulate these innovative business leaders who are contributing to the economy by employing others in a way that may not be the traditional form of recruitment but in a way that is right for their business. These businesses are fit, flexible and ready for growth. – Emma Jones

• Record number of start-ups, Jonathan Moules, Financial Times