There was an article in the Welsh press recently reporting a decline in the number of business start-ups throughout the UK. There were two possible reasons suggested for this. The first, by Lloyds Bank was that it was a result of a decline in the economy and the second, by Professor Dylan Jones-Evans was that it reflected an upturn in the economy since people are driven to self-employment when there are no alternatives.
Whilst there is probably truth in both these positions, they do not reflect the complexity behind decisions to become self-employed and so I thought I would contribute some views based on the Purple Shoots experience.
Purple Shoots offers loans to individuals starting a business, usually as sole traders or partnerships, who struggle to get funding from other sources. Most of our clients were unemployed before they got their loans, but I would disagree with the argument that they are driven to self-employment because of a lack of other alternatives. It does appear to be the case that some Job Centre advisors may push unemployed people towards self-employment, but without other drivers to pursue it, in my experience, it is unlikely that these people will see it through and actually start a business.
By the time potential clients reach us, they have already had a number of push backs, funding refused etc, so to keep going they have demonstrated great tenacity and perseverance – necessary qualities for new business owners. Having to live on benefits they have also developed skill at stretching limited funds and identifying priorities for spending and delaying non-essentials – more important skill for running a business. They have also, when in work, noticed mistakes their employer is making or ways of doing things better or opportunities in the market to exploit – things on which to base their business. Coupled with that is their own knowledge of their community where the business will be based and their own contacts. The decision to go into self-employment will take all this into account.
Some of the reasons given to me for wanting to start up include:
- It is a culmination of a long held dream or desire to do their business
- It will enable them to work around a disability or caring responsibility
- They want to make a difference to their community – a business to revitalize it and provide more jobs
- They don’t want to rely on or live on benefits.
All these seem to me to be far more positive than simply a response to an economic situation – whether it is a downturn or an upturn. The reality, certainly for the Valleys of South Wales where the majority of our clients are based, is that there have not been the economic fluctuations experienced elsewhere in the UK. There was no boom and no real bust – people have been coping with a pretty bleak economic outlook for years and nothing in 2016 has changed that either way. The businesses we are supporting are started by individuals trying to change things for themselves and their communities in the face of difficult circumstances and lots of negative attitudes towards them – and they deserve admiration and support. Luckily, there was no decline in their numbers last year.