2. 2 Tomorrow’s Enterprise
Foreword
The government’s policy manual for enterprise needs an update.
Why? Take a closer look at the economy on a grass-roots level and it is obvious. The
UK is experiencing a remarkable surge in entrepreneurship. There are now over 5.4m
businesses, a million more than there were before the financial crisis. In 2015 alone,
close to 600,000 businesses were created. This has coincided with the biggest self-
employment boom in 40 years. Registration data gathered from Companies House
shows that companies are being created at the rate of more than one a minute.
There are now more businesses being created than people going into full-time jobs,
cementing the UK’s position as Europe’s ‘capital of enterprise’. Furthermore, the UK has
become a world leader in the digital economy and the opportunities it holds for budding
entrepreneurs. This ‘revolution’ has powered the UK to become the most dynamic
major economy in the world.
According to the World Bank’s latest Ease of Doing Business ranking, the UK is the sixth
best place to start and run a business, even coming ahead of the US. This has led Lord
Young to call this the ‘golden age’ for entrepreneurship in the UK and declare that there
has never been a better time to start your own business. The government now has the
opportunity to lock this in for the foreseeable future. This report explores what this means
for government policy on enterprise, and how it needs to be updated to reflect the
changing reality of how people do business.
When I speak to entrepreneurs across the country, I get a sense of their ambition to grow.
However, all too often these plans are not realised. For every 10 new businesses which are
created, 6 existing ones are dissolved. Business failure is a natural part of a competitive
economy. However, the excessively high instance of business failure is a problem and one
that we believe the government, in partnership with the private sector, can help fix.
Michael Izza, Chief Executive, ICAEW
3. 3Tomorrow’s Enterprise
At the last general election, the government received a mandate for enterprise. As we look
ahead over the course of this Parliament, Tomorrow’s Enterprise urges government to
make the survival and growth of new businesses a matter of national priority. This report
makes the following four recommendations for policymakers both in government and
outside government to consider. We believe these points lie at the heart of a long-term
plan for enterprise.
Make business survival a national priority by recognising the importance
of business advice
Release the untapped potential of home-based businesses by levelling
the playing field
Connect new businesses with the fast-growing digital economy by getting
them online
Encourage new businesses to start exporting by providing them with
early-stage export advice
With the public finances still under pressure, we understand that the government has
little room for manoeuvre to significantly increase investment on business support
programmes. Tomorrow’s Enterprise does not recommend this. Rather, we focus on
existing government policies that we believe have proven successful so far. By putting
further weight behind these programmes as opposed to initiatives which have not worked
as well, ICAEW believes the government can ensure that it provides the necessary support
to aspiring businesses while also meeting its effort for a more efficient Whitehall.
As chartered accountants advising 1.5m businesses across the UK, we have a unique
vantage point of the winds of change blowing across the economy. Equipped with this
insight, this report highlights what government and businesses themselves can do to
ensure the UK remains the ‘capital of enterprise’.
4
3
2
1
4. 4 Tomorrow’s Enterprise
A timely report …
This ICAEW report makes recommendations in four areas close to my heart: unleashing
the growth potential of home-based businesses; increasing exports; making the most of
the digital opportunity; and ensuring small businesses get access to the right advice,
at the right time.
Tomorrow’s Enterprise does not call for an increase in small business support programmes
funded by government; a sensible reality in an age of budget cuts that have seen schemes
such as Growth Accelerator and MAS (Manufacturing Advisory Service) abolished. Rather,
it looks at existing schemes and suggests areas for improvement. It comes at a critical
time; a new era for business support as government asks the private sector to step up
and deliver.
At Enterprise Nation we believe business support is best delivered by entrepreneurs who
have been there and done it, experts and advisers qualified in specific topics, and small
businesses supporting each other as peers.
The role of government is to set the conditions for growth – decent tax rates, superfast
broadband, good transport links and confidence in the economy. It also has a role as
chief purchaser, with a target of £1 in every £3 of government contracts to be spent
with small businesses.
Placing contracts and facilitating private sector provision of business support is the future
role for government. The job of delivery is now down to organisations such as ICAEW. This
represents a new era and a move in the right direction for the growth of small business.
Emma Jones MBE is founder of Enterprise Nation and was appointed as a Business
Ambassador by Prime Minister David Cameron.
Emma Jones, Enterprise Nation
5. 5Tomorrow’s Enterprise
Contents
Summary of key points
State of enterprise
Who are tomorrow’s enterprise
Business advice for a new generation
Recommendation 1: Make business survival a national
priority by recognising the importance of business advice
Hidden heroes: businesses
at the ‘home front’
Recommendation 2: Release the untapped potential of
home-based businesses by levelling the playing field
Boosting connectivity in the digital age
Recommendation 3: Connect new businesses with the
fast-growing digital economy by getting them online
Born global: enterprise beyond borders
Recommendation 4: Encourage new businesses to
start exporting by providing them with early-stage
export advice
i
ii
iii
iv
6. 6 Tomorrow’s Enterprise
Summary of key points
Make business survival a national priority by
recognising the importance of business advice
Less than half of new businesses survive beyond their first four years. The high
instance of business failure reflects the failure of government to seriously tackle
the problem with any long-term commitment. As a first step, government needs
to extend programmes such as the Growth Vouchers beyond the current
short-term shelf life of a few years to at least over the course of the Parliament.
A stop-start approach to business advice and growth will only result in the
continuing high rates of business failure.
Release the untapped potential of home-based
businesses by levelling the playing field
With 70% of all new businesses starting off in the home, and with over half
of current businesses still home based, it is important that government policy
reflects this reality. Rather than being placed on the fringes of policy making,
home-based businesses should be front-and-centre of government efforts
to boost growth across the UK, especially when it comes to devolution and
deregulation. Local Enterprise Partnerships and Growth Hubs should provide
greater ‘visibility’ to home-based businesses by bringing them into the local
business networks and giving them access to the opportunities that devolution
will bring.
Connect new businesses with the fast-growing
digital economy by getting them online
Government needs to give a long-term digital commitment to business. To
maintain the UK’s position as a world leader when it comes to e-commerce,
the government should start by giving business the message that it is serious
about the UK’s place in the interconnected economy of the 21st century.
It should extend the successful Broadband Connection Voucher scheme
to at least 2020 to make sure budding entrepreneurs are not left behind in
the ‘digital race’. Government should also work with the private sector to
encourage more businesses to trade online and establish a web presence
which is critical in the digital age.
Encourage new businesses to start exporting by
providing them with early-stage export advice
Tomorrow’s businesses must become tomorrow’s exporters. The government
target to reach £1 trillion in exports by 2020 remains beyond reach. It is clear
that policies aimed at boosting UK exports demand a refresh. In a similar way
to how the government, working with the private sector, has targeted early-
stage finance as a major bottleneck for new firms, it must now explore the
benefits of early-stage export advice with a similar vigour, especially if the
ambition to have 100,000 new exporters is to be realised. The awareness and
take-up of the government’s First Time Exporters (FTE) initiative must be scaled
up to help achieve the step change required in the UK’s export performance.
1
2
3
4
7. 7Tomorrow’s Enterprise
‘This is the golden age for enterprise
– there has never been a better time
to start a business.’
Lord Young
8. 8 Tomorrow’s Enterprise
‘What is my message to government?
Simply put … ensure that the public
policy environment reflects the
changing face of enterprise in the UK
and it allows it to grow and prosper.’
Michael Izza, Chief Executive, ICAEW
10. Tomorrow’s Enterprise
0 2 4 6 8 10 12
Entrepreneurial activity score
Italy
Germany
France
Spain
Switzerland
EU average
Netherlands
UK
Source: Global Entrepreneurship Monitor (GEM) 2015. Only Slovakia and
Romania score higher than UK in Europe
UK is the ‘capital of enterprise’
in Europe
Growth in number of
businesses in UK
2000–2015
Growth in UK
population as a whole
2000–2015
Number of businesses have grown five and a
half times faster than the population as a whole
There are now a million more businesses
than before the financial crisis
0
1
2
3
4
5
6
Total businesses
Home-based businesses
20142013201220112010
Source: ONS, home workers rate
No. of businesses (million)
Home-based businesses account
for half of all businesses
After 1 year After 2 years After 3 years
Businesses not surviving
Businesses surviving
After 4 years Source: ONS, Business Demography, 2014
Less than half of new businesses survive
beyond their first four years
3.0
3.5
4.0
4.5
5.0
5.5
No. of businesses (million)
201520142013201220112010200920082007200620052004
Source: BIS, Business Population Estimates, 2014
State of enterprise
11. Tomorrow’s Enterprise
5
6
7
8
9
Business/population density
201520122009200620032000
Source: BIS Population Estimates, ONS Annual Population Estimates
Business density in the UK remained
strong during the recession
0
2
4
6
8
10
12
14
New business density
New registrations per 1,000 people, aged 15-64
Japan
(2014)
Germany
(2013)
Canada
(2014)
Italy
(2014)
France
(2014)
UK
(2012)
Source: World Bank, New Business Density
No recent data available for the US in World Bank database
UK outperforms the G7 economies
on new business creation
Large (250+)
Medium (50–249)
Small (10–49)
Micro (0–9)
No. of exporters
(% of total)
Source: ONS, Annual Business Survey, 2014
LargeMediumSmall & micro
Exporters
Non exporters
Source: ONS, Annual Business Survey, 2014
Micro-businesses account for
75% of all exporters
However ... only 10% of small and micro
businesses currently export, leaving
a huge untapped potential
Quick facts
UK is ranked
No.1 in the
world for
trading online
1ST
Only two of out five
small businesses have
access to superfast
broadband
2 out
of 5
70% of all new
businesses start
off in the home70%
For every 10 new
businesses created,
6 existing ones
are dissolved
6
Small businesses trading
online receive double
in export revenue than
those that do not
DOUBLE
12. 12 Tomorrow’s Enterprise
i Business advice
for a new generation
Make business survival a national priority by
recognising the importance of business advice
The state of enterprise is evolving. There has been a 55% increase in the number
of businesses in the UK since 2000.1
To put this in context, the growth in the UK’s
population as a whole over that same period has been around 10%. However, despite
the surge in this new generation of entrepreneurs, less than half of new businesses
survive beyond their first four years. To reap the benefits of this ‘golden age’ of
enterprise, it is time that the government made business survival a national priority.
New businesses that seek and get strategic business advice are more likely to survive
and grow.2
Despite the increasing availability of advice and support options for start-
ups and small businesses, it remains a challenge for government to get the right
support to the right business at the right time.3
If the UK is to establish itself as the
‘scale-up nation’ as Sherry Coutu, the famed serial entrepreneur,
has termed it, then there needs to be the right policy environment
for survival and then growth. Research carried out by Barclays in
its Entrepreneurs Index shows that despite the expansion of the
entrepreneurial base in the UK, the proportion of businesses which
are achieving high growth is actually falling.4
If the base of the
pyramid is allowed to become too broad without firms being able
to scale-up by moving up the ladder, then we will continue to see
too many businesses not surviving those all too crucial early years.
Currently, less than 50% of new businesses survive beyond their
first four years. This high instance of business failure has an adverse
impact on other areas of government policy such as exports, which is
discussed later on in the report. For example, over 80% of current exporters are those
that have managed to survive their first four years. Therefore, a greater number of
businesses surviving beyond this threshold will help support government ambitions to
increase the number of UK exporters.
In an open and competitive economy like the UK, business failure is understandably
part and parcel of the entrepreneurial experience. Businesses compete with each
other, and it is this competitive element which encourages innovation, productivity
and growth. Poor performing businesses will always be vulnerable to failure. Policies
which artificially keep afloat non-competitive and non-productive businesses are
ultimately doing more harm than good. However, government program mes, many
of which are joint public and private initiatives, which provide a springboard for
innovative and exciting businesses to reach their true potential, should be placed
on a firmer footing. The onus of business success or failure ultimately lies with
the entrepreneur or business itself, however government can play a strategic role
alongside the business in its journey from start-up to scale-up.
Why is this important?
Despite the surge
in entrepreneurship,
less than 50% of
new businesses
survive beyond
their first four years
13. 13Tomorrow’s Enterprise
Less than half of new businesses survive beyond their first four years. The high
instance of business failure reflects the failure of government to seriously tackle the
problem with any long-term commitment. As a first step, government needs to extend
programmes such as the Growth Vouchers and Business Growth Service beyond
the current short-term shelf life of a few years to at least over the course of this
Parliament; to 2020 and beyond. A stop-start approach to business advice and growth
will only result in the continuing high rates of business failure.
Over the course of the last Parliament, the government worked closely with business
organisations and the private sector to set up a range of initiatives aimed at helping
businesses looking to grow. Examples, among many others, include Start-up Loans, Business
Growth Service, British Business Bank and the Growth Vouchers scheme. In fact, in 2014
ICAEW worked with the British Business Bank to produce the Business Finance Guide report
which has become a seminal tool for ambitious businesses exploring financing options to
help them scale-up.
Since being set up, these programmes have been successful in helping thousands of
businesses across the country. However, as effective as these programmes may be, far too
many of the government’s policies designed to boost enterprise are short term in scope and
vision. The Business Growth Service had a shelf life of only a few years and contracts were set
to expire in 2017.5
However, the government’s decision to suddenly axe the scheme a couple
of years before its original end date is an example of the short-sightedness within Whitehall.
The Growth Vouchers programme had an even shorter lifespan of just
over a year. Launched in January 2014, it was designed to be a 15-month
long pilot scheme aimed at helping small businesses access the strategic
advice critical to their survival and growth through the provision of a
voucher up to the cost of £2,000. The programme was used to explore
how getting strategic business advice can help small businesses overcome
barriers to growth. It came to a close in March 2015 and the Department
for Business, Innovation and Skills (BIS) is currently evaluating the findings.
However, it is obvious that to fully evaluate the importance of business advice for small
businesses, the Growth Vouchers scheme should have been longer than only 15 months. This
explains why the take-up of these vouchers has failed to meet government expectations. As
shown by other government voucher schemes such as the Broadband Connection Voucher
programme, there is an initial time lag involved in raising awareness of the programme and
this may result in a slow take-up of the vouchers by businesses at the beginning. This has
been the same for the Growth Vouchers. It is important that the scheme is reinstated and
placed on a longer-term footing. Only by assessing the impact over a number of years, rather
than months, can government fully recognise the importance of business advice.
As the new generation of entrepreneurs and businesses come on line and look for
opportunities to grow, the public policy environment built to facilitate this must be long term
in its approach. Helping more and more businesses go beyond the three or four year survival
threshold requires long-term commitment from government. A constant ‘chop and change’
culture in Whitehall will not achieve the results we want to see. This is a suggestion which the
BIS Select Committee has also raised.6
What should be done?
For every 10 new
businesses which are
created, 6 existing
ones are dissolved
14. 14 Tomorrow’s Enterprise
Around half of all businesses in the UK are home based, a million of which have been
around for more than two decades.7
These are established businesses in their own right
operating at the heart of the UK economy and are anything but the ‘fringe start-up’
they are usually labelled with. To a large extent, when we speak about tomorrow’s
enterprise and the entrepreneurs of the future, we are actually speaking about home-
based businesses. Around 70% of all new businesses start off in the home. Home-based
businesses are the vanguard of the UK’s enterprise ‘revolution’. There are now half a
million more home-based businesses than there were in 2010. The implications and
opportunities that this surge brings are huge. For example, if only half of all home-
based businesses took on just one additional employee, it would create close to
1.5m jobs.
Home-based businesses that are growing and expanding may move into a business or
commercial property after a few years, but their most critical and formative years are
spent being home based. Therefore, the policy and regulatory climate these businesses
face must be one which is conducive to their growth. How they will fare in the move
towards greater devolution across the UK is one important example of this.
The devolution of powers and responsibilities away from Whitehall to cities and regions
represents both a challenge and opportunity for businesses, especially those operating
from home. How will this transfer of power impact, or not impact, the roughly 3m
home-based businesses in the UK? How can we ensure that home-based businesses are
not treated as ‘invisible’ businesses by these newly devolved authorities but rather as
a core part of the local economy? The role of Local Enterprise Partnerships (LEPs) and
Growth Hubs will, to a large extent, determine this.
ii Hidden heroes: businesses
at the ‘home front’
Release the untapped potential of home-based businesses
by levelling the playing field
Why is this important?
15. 15Tomorrow’s Enterprise
What should be done?
With 70% of all new businesses starting off in the home, and with over half of
current businesses still home based, it is important that government policy reflects
this reality. Rather than being placed on the fringes of policy making, home-based
businesses should be front-and-centre of government efforts to boost growth
across the UK, especially when it comes to devolution and deregulation. For
example, Local Enterprise Partnerships (LEPs) and Growth Hubs should provide
greater ‘visibility’ to home-based businesses by bringing them into the local
business networks and giving them access to the opportunities that devolution will
bring. The deregulatory agenda should also have home-based businesses in mind
by making it easier for them to grow and expand by taking them out of the scope
of business rates.
LEPs, which were introduced during the last Parliament, will have a central role to play
in ensuring that the voice of business is included in the devolution deals taking place.
Many of the 39 LEPs across the country have been at the heart of
the negotiations that have taken place between central government
and the devolved city-regions. One of the earliest city-regions to
submit plans for a devolution deal was the Sheffield City Region.
It included plans to ‘develop a devolved approach to the delivery
of business support’. This is an early indication of how business
support schemes will increasingly be delivered at the local level and
through a regional lens, rather than a national one. Therefore, as
central government looks to recognise the importance of regional
growth through devolution, the regions in turn should recognise the
importance of businesses operating from the home. This will represent a true devolution
of economic opportunity.
Recognising the growing clout of this particular business demographic, the government
recently made changes in the valuation of business rates so that in the majority of
circumstances home-based businesses will not have to pay business rates. However, those
home-based businesses that are looking to grow by recruiting employees are currently
not included within this exemption and therefore incur business rates. The additional
cost acts as a barrier to growth and is an unnecessary regulatory burden on hard-working
businesses looking to grow and push the UK economy forward. Although the majority of
home-based businesses do not employ additional staff or have any immediate ambitions
to employ staff directly (outsourcing is a preferred option), research carried out by
Enterprise Nation shows that home-based businesses are responsible for over half a million
additional jobs in the UK. We urge the government to free up the true potential of home-
based businesses, the so called ‘hidden half’, by removing the burden of business rates
which they accrue if they are looking to grow by taking on employees.
If only half of home-
based businesses took
on just one additional
employee, it would
create 1.5m jobs
16. 16 Tomorrow’s Enterprise
In his book The New Digital Age, Google’s Eric Schmidt describes
how the mass adoption of the internet is ‘driving one of the most
exciting social, cultural and political transformations in history,
and unlike earlier periods of change, this time the effects are fully
global.’ It is clear that the mass adoption of the internet as well
as other forms of digital technology, have also led to an ongoing
economic transformation and impacted the way entrepreneurs
interact with the global marketplace. The endeavour of enterprise
continues to evolve and in many cases public policy is playing
catch up.
In this new digital age, newer generations of start-ups and
entrepreneurs think more globally from the beginning than their
predecessors. Why is this mindset so important? Research by
BIS found that the most important factor for business success is
ambition. Those businesses starting out with higher growth
expectations perform more strongly than their counterparts.
18. 18 Tomorrow’s Enterprise
The World Economic Forum recently ranked the UK as number one in the world when it
comes to businesses trading with their customers online.8
It’s one of the only global league
tables where the UK is in pole position, highlighting the national competitive advantage
the UK has in the digital economy. HM Treasury estimates that the digital economy is now
equivalent to 10% of GDP – greater than major sectors such as construction and transport.
The UK is already the second largest e-commerce market in the world, relative to the size
of the population.9
In a ‘digital first’ world, businesses need access to superfast digital networks if they are
to remain competitive, productive and visible to the marketplace. The government is
aware of the benefits of this and knows that small businesses which trade online receive,
on average, double the revenue from exports than those businesses that do not trade
online.10
However, despite this and the World Economic Forum’s top ranking of the UK,
still less than a third of small businesses currently trade online. Research by BIS shows that
only two out of five SMEs have access to superfast broadband at all.11
It is clear that more
needs to be done to encourage and facilitate more businesses, especially new ones, to
have a digital footprint.
The recent success of the government’s Broadband Connection Voucher scheme indicates
the growing appetite and demand for a faster and more reliable internet connection.
The scheme enables small businesses, operating in 50 cities across the UK, to claim up to
£3,000 to cover the cost of connecting or upgrading to superfast broadband. Before the
programme came to an abrupt end in October 2015, the vouchers were being issued to
small businesses at the rate of 1,000 a week. Examine the scheme in further detail, and it
is obvious why the demand was so huge. Early analysis on the success of the Broadband
Connection Voucher scheme has found that over 80% of businesses reported that their
broadband upgrade had improved both the productivity and efficiency of their business.12
The results speak for themselves. Putting in place ‘world class digital infrastructure’ is a
core part of the government’s Productivity Plan.13
According to figures the government
itself uses, investment in high-speed broadband has the potential to add £6.3bn in gross
value-added to the UK economy over the next 10 years.14
The £40m price tag of the
voucher scheme is equivalent to only 6% of this, showing that any further investment in
high-speed broadband will be an extremely small price to pay to unlock the vast returns
from the fast-growing digital economy.
iii Boosting connectivity
in the digital age
Connect new businesses with the fast-growing
digital economy by getting them online
Why is this important?
19. 19Tomorrow’s Enterprise
Research by BIS
shows that only
two out of five
small businesses
have access
to superfast
broadband
What should be done?
Government needs to give a long-term digital commitment to business. To
maintain the UK’s position as a world leader in e-commerce, the government
should start by giving business the message that it is serious about the UK’s place
in the interconnected economy of the 21st century. It should extend the successful
Broadband Connection Voucher scheme to at least 2020 to make sure budding
entrepreneurs are not left behind in the ‘digital race’. Government should also work
with the private sector to encourage more businesses to trade online and establish
a web presence which is critical in the digital age.
The European Commission has identified the creation of a Single Digital Market as one of
its main priorities. The UK Government has pushed the European Commission to make
it easier for digital businesses, especially new and micro businesses, to set up and trade
online instantly across all EU member states. British businesses will benefit from this more
than their counterparts across the continent. The UK’s number one ranking in the World
Economic Forum’s table for businesses trading online stands in stark contrast to the other
major European economies like Germany (ranked 13th) and France (ranked 29th). As
the UK Government looks to work with the European Commission to
strengthen the single digital market across the continent, it should
increase its support and engagement with British enterprise to make
sure that the UK maintains its premium position as the global leader.
The digital market begins at home.
A first step should be to significantly increase the reach of the
Broadband Connection Voucher scheme by extending the programme
to the end of the Parliament. Sufficiently resourcing the programme will
be critical if the government is to meet its own ambition to make sure
that the UK ‘maintains its position as the best internet economy in the
world’.15
Therefore, the £40m fund allocated to the programme, which
is much reduced from the initial £100m amount, needs to be increased.
In fact, the reason behind the abrupt end of the scheme was due to its ‘first come, first
served’ approach which meant that once the £40m pot was empty, the government
pulled the plug on it, regardless of the high demand from businesses. Speaking about
the scheme when it was first announced in 2013, the Prime Minister highlighted the
importance of ‘kitting out SMEs for the 21st century’ to allow them to ‘compete in the
global race’. It is clear that a short-term ‘first come, first served’ approach will not achieve
this. Government needs to give a long-term digital commitment to business.
20. 20 Tomorrow’s Enterprise
Digital technologies and platforms are empowering entrepreneurs to think big. As the
world becomes smaller and national borders become invisible through developments in
technology and transportation, the opportunities which exist for entrepreneurs from the
outset are now global in scale. This explains why a recent survey found that close to 70%
of exporters have always exported – they were ‘born global’.16
This signals a shift away from the traditional stage-theory approach to exporting where
businesses start trading internationally once they have reached a certain size and have
saturated their domestic market. However, recent trends and data paint a more dynamic
picture. Official figures show that over 90% of exporters are actually small businesses,
with micro businesses (0-9 employees) accounting for three-quarters of all those who
currently export.17
Come 2020, the independent Office for Budget Responsibility expects the value of UK
exports to be just £630bn, around a third lower than the government’s
£1 trillion target.18
The government wants to increase the number of
exporters by 100,000. ICAEW regularly speaks to small businesses about
their exporting ambitions. Their feedback indicates to us that, despite
the government’s target, there aren’t 100,000 export-ready businesses
knocking at the door. It is becoming increasingly obvious that any effort
to reach the government’s target of 100,000 new exporters will require
nothing less than a fully-committed campaign to ‘win the hearts and
minds’ of UK businesses. The value of export needs to be sold to these
businesses. Marketing initiatives by UKTI and other parts of government
are part of the solution, but much more needs to be done.
The First Time Exporters (FTE) initiative is one such example. The programme, launched
by the government shortly after the general election in 2015, is a package of support
offered by UKTI which includes training and advice for businesses selling overseas for the
first time. It will also help new exporters to take advantage of the digital and e-commerce
opportunities by offering dedicated digital trade advisers to assist their export planning,
and also direct them to ‘live’ exporting opportunities. This is an example of where
government programmes have the potential to make a significant contribution to help
new businesses realise their exporting ambitions.
iv Born global: enterprise
beyond borders
Encouraging new businesses to start exporting by
providing them with early-stage export advice
Why is this important?
Public policy is
playing catch-up
as the nature
of enterprise
continues
to evolve
21. 21Tomorrow’s Enterprise
What should be done?
Tomorrow’s businesses must become tomorrow’s exporters. The government
target to reach £1 trillion in exports by 2020 remains beyond reach. It is clear that
policies aimed at boosting UK exports demand a refresh. In a similar way to how
the government, working with the private sector, has targeted early-stage finance
as a major bottleneck for new firms, it must now explore the benefits of early-stage
export advice with a similar vigour, especially if the ambition to have 100,000 new
exporters is to be realised. The awareness and take-up of the government’s First
Time Exporters (FTE) initiative must be scaled up to help achieve the step change
required in the UK’s export performance.
It is important that more and more new businesses and start-ups go on to join the ranks
of existing businesses that trade internationally. In a similar way to how the government,
working with the private sector, has targeted early-stage finance as a major bottleneck
for new firms, it must now explore the benefits of early-stage export advice with a similar
vigour. This fleet-of-foot and agility in government policy now needs to be applied to
efforts aimed at boosting UK exports, especially from new businesses and first-time
exporters. Currently, the policy framework resembles an analogue system trying to keep
up with a digital age. Most government-backed trade missions are the preserve of larger
businesses, in the hope that any benefits trickle down the supply chain. However, that is
an outdated model in the current climate, and certainly not befitting the digital age we
now live in.
New and small businesses are the ‘gatekeepers’ for the UK’s export ambitions, especially
if there is to be any chance of increasing the number of exporters by 100,000. Despite
the fact that small and micro-businesses account for over 90% of existing exporters, only
10% of them currently export.19
This presents a huge untapped potential. Considering
that there are over 5m small businesses in the UK, even raising the percentage of small
exporters by a few points will significantly increase the number of businesses exporting.
The FTE initiative, if properly resourced and communicated to new businesses, has the
potential to achieve this.
22. 22 Tomorrow’s Enterprise
The British Business Bank is a government-owned financial institution set up to support
economic growth by making finance markets work better for smaller businesses in the UK.
The British Business Bank supports smaller UK businesses in three broad areas.
• Start-up – mentoring and funds to ‘be your own boss’.
• Scale-up – finance for businesses growing quickly or those with the potential to do so.
• Stay ahead – more funding options and greater choice of providers for expansion
and working capital.
Find out more at british-business-bank.co.uk
ICAEW’s Business Advice Service offers help to businesses in England, Scotland and
Wales to overcome the challenges they face, including:
• how to grow a business;
• securing loans, capital and finance;
• keeping staff and creating new jobs;
• meeting tax and regulatory requirements;
• export planning;
• planning for long-term sustainable growth;
• debt management; and
• legal issues.
Businesses are offered a free advice session with an ICAEW Chartered Accountant. Visit
businessadviceservice.com to find the nearest office participating in the scheme.
UK Trade & Investment (UKTI) is the government department that helps UK-based
companies succeed in the global economy.
UKTI offers expertise and contacts through its extensive network of specialists in the UK,
and in British embassies and other diplomatic offices around the world. They provide
companies with the tools they need to be competitive on the world stage.
Get support
23. 23Tomorrow’s Enterprise
Footnotes
1 BIS, Business Population Estimates 2015
2 Lord Young, 2013
3 Lord Young, 2015
4 Barclays, Entrepreneurs Index, 2015
5 http://www.publications.parliament.uk/pa/cm201415/cmselect/cmbis/770/77011.htm
6 Report to government, 2015
7 Enterprise Nation, Home Business Survey, 2014
8 World Economic Forum, 2015
9 Boston Consulting Group
10 HM Treasury, 2013
11 BIS, 2015
12 Connection Vouchers, Early Impacts and Data Analysis
13 HM Treasury, Fixing the foundations, July 2015
14 HM Treasury, Fixing the foundations, July 2015
15 HM Treasury, 2013
16 Barclays
17 ONS, Annual Business Survey
18 OBR, Economic and Fiscal Outlook, July 2015
19 ONS, Annual Business Survey, 2014
