Bill Jamieson: Small business is key for recovery

FROM whence is recovery to come? Last week saw an impressive 1 per cent bounce in the economy in the third quarter. It came with signs, albeit glacial, of a recovery in retail sales and continuing falls in unemployment – at least south of the Border.

FROM whence is recovery to come? Last week saw an impressive 1 per cent bounce in the economy in the third quarter. It came with signs, albeit glacial, of a recovery in retail sales and continuing falls in unemployment – at least south of the Border.

But banks are still gummed up with toxic loans. The government, with debt on course to triple between 2008-09 and 2015-16, is in no position to launch fiscal stimulus. High streets are riddled with empty shops. And bank debt de-leveraging could take many years yet.

So from where is growth to come?

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Yesterday Lord Heseltine, the former Conservative deputy prime minister, challenged the UK government to take bolder action. He wants to see £49 billion moved from central government to the regions to be distributed locally, rather than through central government. Whether Scotland sees any of this is moot.

But moving money from one government body to another is not much help to enterprise. The risk is that money of this sort – raised by taxes on business and households – ends up in local authority vanity projects or the bureaucratic treacle that fattens up quango agencies but does little for business generation.

Our best hope for recovery is to be found – as it has historically always been found – in the enterprise and entrepreneurialism of hundreds of thousands of small businesses across the economy.

And here there is encouraging news to report – news that gets all too little coverage amid the special pleading of public bodies, “enterprise partnerships” and the planning bureaucracy.

Entrepreneurs haven’t been waiting for the economy to come out of recession before starting a business. They have been setting up enterprises at a truly impressive rate.

According to the Start-Up Britain business tracker, 36,531 new businesses were registered in October. And the total so far this year has now crossed 400,000 – 406,457 to be exact.

Says Emma Jones, business expert and Start-Up Britain co-founder, “We’re seeing record numbers of people setting up a business. Our Start-Up Tracker will offer a daily confidence boost to anyone thinking about starting up.”

The tracker has been created using data from Companies House and interpreted for the tracker by the Made Simple Group. The firm’s chief executive, Howard Graham, said, “These stats are very telling about the optimism and momentum within the start-up sector – the Start-Up Tracker makes this visible for all to see.”

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It’s easy to be cynical about these figures. Many new firms are tiny. And many thousands of businesses have also been going under. But the start-up rate is an eye-opening reminder that we have not lost our drive for enterprise and that even in the most discouraging period in our economic history, thousands of people, young and old, want to start a business and pursue their dream.

Scottish Government statistics show that small and medium-sized enterprises (SMEs) now account for 99 per cent of all Scottish businesses and for more than half of all private sector employment – underlining the pivotal role of small firms in our economy and communities.

Business Gateway, the local authority-backed organisation set up to help business start-ups, is dealing with a record number of inquiries. The number of unique visits to its training and advice directory has more than doubled in the first quarter of the financial year.

In the first six months of the year, the training directory has been the most visited area on the Business Gateway website and has overtaken the start-up figures. In the first quarter of 2012-13 the training area of the web site recorded 205,280 unique visits. This compares with 101,792 for the same period last year. Says BG’s Hugh Lightbody, “We see this as encouraging when you reflect on on-going economic conditions. We’ve had a succession of reports about depressed retail spending, manufacturing struggling, and other pointers which have hit people’s confidence. However, there is a big increase in the numbers seeking advice about business start-up.”

In Scotland there are encouraging and deeply inspirational stories to be found. Last month Santander Bank held a Breakthrough Live event in Edinburgh for growing businesses. Some 200 people heard the inspiring story of Petra Wetzel, the striking 36-year-old business woman who wowed the audience with the story of how she built up her West micro-brewery in Glasgow from start-up, through disaster to stunning recovery. Now she is selling some 500 kegs around the UK. Last year she went for a massive expansion. A new £6.6 million brand new brewery, Noah Beers, employing 40, has increased capacity 50-fold.

The things to take away from this story are total dedication to an idea – even in the face of daunting adversity; immersion in the detail, character and requirements of product and customer; ingenuity, dedication and resourcefulness – no scale too small. Her inspirational story drew thunderous applause.

Or there’s Wendy Hamilton of Helensburgh, a former scientist who launched her own online toy shop, Grasshopper Toys, which aims to encourage a love of science through play. Helped by Business Gateway she is now having to invest to meet strong customer demand.

You can learn more about new enterprise when the Start-Up Britain campaign bus arrives in Scotland, hitting Glasgow next Tuesday and calling at Stirling and Edinburgh on Wednesday. There is also a one-day Start Up Summit on 14 November at the Assembly Rooms, Edinburgh featuring, among others, Lucy Frankel of Vegware, Callum Murray of Fresh Interior Solutions, the Alba Innovation Centre and not least Emma Jones, the inspirational driver of the Start-Up campaign.

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There are dozens of stories like this that have the capacity to inspire Scotland out of our economic rut. And it is in stories like these that our recovery is to be found – just as it was found in the recoveries from 1979-81, 1991-92 and 2001-02.

Entrepreneurialism is not just about finding employment. Its greater contribution is in the discovery process of enterprise – the way in which market research, innovation and personally motivated business exploration can develop the new growth sectors of tomorrow – rather better, I suspect, than shuffling money between Whitehall and the ever-open mouths of local town halls.

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