Tuesday, November 04, 2014
It's a global market
In a recent blog we reported on the growth of homepreneurs in the UK, some 2.9 million largely creative businesses operating from a home office. This group are distanced from the similarly large group of tradesmen - builders, painters, plumbers, gardeners and the rest serving very local customers. The home based entrepreneurial businesses are said to be contributing £300 billion a year to the UK economy, with one third operating in international markets. Interestingly 65% plan to stay home based.
Think about this for a moment. An important sector of the reviving UK economy is not based on a traditional business model and nearly two thirds plan to stay with this model and not convert to a 'bricks and mortar' operation. Clearly a lot of entrepreneurial talent finds the fluidity of this approach works for them. A big difference is that homepreneurs might be driving business forward in global markets, but are not necessarily creating new jobs on the traditional basis of providing premises to which employees can commute and earn a salary. Instead the work opportunities they create for others is more likely to be awarded to similar businesses or individuals who are not employees. In short the Internet has allowed home based entrepreneurial businesses to flourish without employees and the whole raft of management, personnel and legal issues that accompany the traditional model of providing employment. Entrepreneurs are not necessarily best at staff management any way and need to concentrate on the core aims of the business, not trying to do something they are not skilled at.
Now think about the approach of successive governments. Most have recognised the need to encourage new businesses to start up and over the years various incentives and support structures have been tried. But ultimately their goal seems to be one of providing employment opportunities. They actually talk about creating jobs. Do the entrepreneurs see that as their purpose, or are they thinking of wealth creation not job creation? Creating work for others is a consequence of the needs of a growing business rather than its purpose.
As we approach next year's general election, the European Union the source of most UK legislation is already a major issue with advocates arguing that membership is vital since 3 million UK jobs are said to depend on the EU. What is not mentioned so often is that the UK is the EU's best customer and 5 million jobs are related to trade in this direction. Others draw attention to the huge membership cost to the UK and volume of legislation businesses have to comply with. Some 1,139 new business regulations were passed by Brussels in the last year alone. Meanwhile businesses are looking at global markets, not just one geographic trade area.
So we have governments with a focus on finding ways to create jobs, not just via new businesses, but in the public sector. On the other hand businesses, certainly the new enterprises are pursuing wealth creation and ultimately that wealth will pay people and support public funds too through taxes. Whether the UK leaves the EU or not there will remain a big global marketing job to do, at home, in the EU and the whole world.