Over the last 30 years I have been involved with small businesses and entrepreneurs in every possible dimension. From my own experiences as an early-stage entrepreneur, to assisting other small businesses by providing cash flow security, the one factor that I have seen everyone grappling with is risk.
Outside the wider issues of business culture, the UK is lagging behind other developed economies because of the burden placed on entrepreneurs and those business angels courageous enough to invest in high-risk businesses.
The present UK government is at least prepared to challenge the status quo, as evidenced by the government’s recent backing of the National Business Angels Network, but this is really just scratching the surface of a far deeper malaise.
The problem we are facing is one of bureaucracy. In the US, private individuals are given incentives to invest in early stage businesses. Potential investors are offered tax breaks on capital invested in high-risk new businesses, while the process of actually doing so is far more simple than it is for UK angels.
Civil service administrators, both within the Treasury and the DTI, seem unwilling to attempt reform unless it can be achieved on a purist level.
Yes, a tiny minority could abuse investment incentives, such as those provided in the US; however, this does not mean that attempts at reform should be shelved altogether. Experience in the US has shown that these incentives have provided a solid backbone for the growth economy.
Similar problems with bankruptcy legislation have hampered entrepreneurial behaviour in the UK, but at long last the government has shown its willingness to redress the current criteria, despite detractors citing potential abuse of the proposed system.
Almost all of those involved in business can see the great sense behind this, not just by directly boosting the SME environment, but also in the long term, by inculcating an entrepreneurial spirit within our society – one which not only accepts risk taking but also admires those who attempt it.
If the UK wishes to be in the forefront of world economic advancement, we need urgently to deal with the regulatory deterrent facing high-risk business angel investors. There is at least an acceptance of a greater need for an US-style SME growth sector, but now is the time for action not platitudes.
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