Noted business thinker Peter Drucker came up with the aphorism “if you can't measure it, you can't manage it”, and while it’s been internalised by many of the UK’s most successful business owners, it doesn’t seem to have been picked up by the government. The National Audit Office (NAO) has reviewed 10 business support schemes run out of the Department for Business, Energy and Industrial Strategy (BEIS) and its conclusions aren’t wholly positive.
According to the NAO, the way schemes are designed and evaluated by the Department did not consistently follow the government’s own guidance. Most of the ten schemes they looked at “lacked measurable objectives from the outset or evaluations of their impact to know if they are providing the most value or if they should be discontinued. Without such analysis, the Department cannot know if its business support is providing value for money.”
In its defence, I’ve read very few NAO reports that aren’t critical, and the report states there “are welcome signs that the Department is improving the set-up and management of new schemes.” But it’s only right that the department's funding is spent as efficiently as possible – both for the good of taxpayers, but also entrepreneurs, who should be benefiting from it as much as possible.
What a relief
Entrepreneurs’ Relief – which enables business owners to pay a lower rate of Capital Gains Tax (10% instead of 20%) on their first £10m when they sell their business – might be scrapped. Sam Dumitiru has written about why doing so would undermine the Enterprise Management Incentive (EMI) and with it the UK’s most ambitious startups and scale-ups. Most commentators and experts have failed to acknowledge this important aspect of the relief. It’s a very big deal. Read his article here, and please share widely if you agree with his analysis.
Peer pressure
The Enterprise Research Centre has released Building resilience in under-represented entrepreneurs: A European comparative study. The two year, five-city study (London, Frankfurt, Milan, Madrid and Paris) concludes that female and ethnic-minority SME leaders run their businesses differently.
“Female and ethnic-minority leaders are more likely than their counterparts in all five cities to express socially and environmentally-focused objectives for their firms. Ethnic leaders generally seek less external advice, and both ethnic and female leaders are more likely to consult informal sources of advice (such as from friends and family members) than non-ethnic and male leaders.”
The report recommends promoting resilience (especially for underrepresented entrepreneurs), crisis planning (which can encourage entrepreneurs to assess a wider range of risk factors that may not otherwise be on their radar), and strong networks (which can facilitate peer exchange and expert input would help engage those entrepreneurs less experienced in engaging with formal sources of advice).
This last recommendation echoes the findings of our Management Matters report and Mentoring Matters report as part of our Female Founders Forum.
Forever and always
In the latest Conversation with Tyler podcast episode, Reid Hoffman, founder of LinkedIn, shares an idea for a board game he wants to create: “One would be a political economy game of creation of companies, partially because I actually think teaching the skills of entrepreneurship is important for how do we make progress in society, how do we solve the future of middle-class jobs, et cetera."
We are onboard with Hoffman’s thinking. Building on our Future Founders report findings, we are kicking off a report in partnership with the Association of Business Executives (ABE) looking at evidence for interventions for enterprise education for 11-15 year olds.
In 2018, I looked at enterprise education at universities for the APPG for Entrepreneurship, but a different age group will require completely different policy levers. Also, this report has an international outlook, as it will be launched at the Commonwealth Heads of Government in Kigali. If you’ve got any experience, evidence or case studies of what works, drop Sam Dumitriu an email with your thoughts.
Nima findings
The latest Brain Business Jobs Index is out. (You may remember that we launched the last report with Dr. Nima Sanandaji.) It’s good news for the UK.
The number of employees of the most knowledge-intensive firms has grown from 2.6 million in 2012 to 3.2 million in 2019. Out of the 602,500 new Brain Business Jobs, 46% have been created in ICT, 31% in advanced services, 13% in the tech sector and 9% in creative professions.
Our main strength is in R&D, head offices & management and film/TV/music. In these sectors, we have close to twice the concentration of knowledge workers compared to the European average.
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