BL-24 - Flipbook - Page 51
ENTREPRENEURS
Mind you, this gap in English is not
restricted to French. We don’t rely
on the Germans for many things
linguistic, but we really haven’t got an
adequate word to replace the German
schadenfreude.
On some of the characteristics of an
entrepreneur we can readily agree.
They should be the founder of a
business and the majority, if not the
entire, owner of it. Accordingly,
the entrepreneur both puts money
at risk and manages a business. So
the ordinary manager of a corporate
business does not qualify because he
or she lacks the risk element. Equally,
a trader in the 昀椀nancial markets
doesn’t really qualify either because,
although they take risk all right, they
typically don’t manage a business as
such.
Economics textbooks used to wax
lyrical about a character called the
entrepreneur, but few of us understood
what they were talking about: in the
昀椀rst few decades after the Second
World War, business seemed to be
all about huge corporations run by
managers.
Over the last few decades, however,
this seems to have changed radically.
The new industries of the tech,
digital and AI world are dominated
by entrepreneurs; that is to say,
individuals who set up their businesses
from scratch and continued to run
them, often making fortunes in the
process. Indeed, most of today’s
richest people are tech entrepreneurs.
In many ways, this represents not so
much a completely new development
as a return to the conditions of
the past. The great, top-hatted
businessmen of the Victorian age who
owned all those dark, satanic mills
and developed markets for British
exports all around the world, were
typically what we would describe as
entrepreneurs.
I suppose we think that
entrepreneurship has been most
obvious in the Anglo-Saxon world,
now principally in America.
You certainly don’t think of
today’s Germany as the home of
entrepreneurship. Mind you, German
industry is dominated by familyowned, or part family-owned,
businesses which at some stage or
other must have been founded by
someone that we would think of as an
entrepreneur.
“In this country, we must
make sure that we are not
now offering bureaucratic
rewards for entrepreneurial
performance.”
Yet entrepreneurship is largely absent
from the current German business
scene. Not so long ago, the German
President was asked what would
have happened if someone like Bill
Gates had started a business like
Microsoft in the garage of his house.
The President replied that it would
have been shut down by the health and
safety inspectors.
We in Britain need far more
entrepreneurs: from small acorns
great oaks do grow. I have often
wondered about the leap from being a
sole trader to becoming an employer
of others. This is a key decision
point for a businessperson and a key
development point for the economy.
A government that wanted to boost
business formation and development
would concentrate on the barriers that
stop someone moving on from being
simply a sole trader.
Some of the barriers are
psychological, and some are real.
The need to register for VAT once
you pass a certain turnover threshold
is a psychological barrier; more
important is the hassle surrounding
the administration of payroll for
employees, including the requirement
to make pension contributions.
And hanging over all this is the risk
that a vexatious employee might
take their employer to an industrial
tribunal, now made worse by the
Government’s Employment Rights
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Bill. For a small business this is
potentially deadly. It is not just
the amount of compensation that a
business might be ordered to pay,
but also the signi昀椀cant waste of
management time in having to deal
with such cases.
What drives entrepreneurs? I don’t
think that it is usually the prospect
of making an enormous amount of
money: at least, not in the short-term.
Entrepreneurs are a strange mixture of
dreamers and doers. But the prospect
of eventually making quite a lot of
money is an attraction. This is over
and above the satisfaction of seeing an
opportunity and having your foresight
and effort rewarded by the market.
As such, it is probably dif昀椀cult to
stimulate entrepreneurship, but
government can discourage it and hold
it back. And, of course, they can drive
entrepreneurs away from the country.
This is a great danger for Britain
today.
Naturally, saddling successful people
with higher and higher tax rates, not
only on income but also on capital
gains and inheritance, is a disincentive
to come to the UK and stay here. But
a more negative factor is the welter
of regulations and restrictions, as
well as a climate in which rich people
are somehow regarded as robbers
who have gained their wealth at the
expense of others.
Some years ago, the eminent journalist
John Plender, who had been railing
against extremely high executive pay,
lamented the way that so many senior
business executives pocketed huge
sums for apparently taking no capital
risk, unlike entrepreneurs. He said that
they enjoyed “entrepreneurial rewards
for bureaucratic performance”. In
this country, we must make sure that
we are not now offering bureaucratic
rewards for entrepreneurial
performance.
