Building Blocks: Our vision for securing Britain's entrepreneurial future

Britain is a great place to be an entrepreneur – with many of the world’s most successful founders calling it home. The startups they have launched make a vital contribution to the economy, providing jobs, tax revenue, innovative goods and services and more. But there is a palpable sense that we could be doing so much better. Productivity has plateaued for far too long, causing living standards to stagnate, and evidence suggests the pace of innovation has slowed.

In Building Blocks, we set out our vision statement to secure Britain’s economic future – arguing that focusing on getting the basics right first is the best way policymakers can support entrepreneurs.

Accelerate to Excel

In this year’s annual Female Founders Forum report, we take stock of what progress women entrepreneurs have made over the past several years since we started researching and campaigning on policies to remove obstacles they face in starting and growing a business.

Written by Margaret Mitchell, and featuring stories from numerous leading women entrepreneurs, among other things, we show how the amount of equity funding for female-led startups remains stubbornly low.

Risk Readiness Report 2023

Risk is part and parcel of being an entrepreneur, and the best among Britain’s startup community are those who can successfully manage and exploit uncertainty.

In our inaugural annual Risk Readiness Report, published with the international law firm Mishcon de Reya, we set out to better understand entrepreneurs’ attitudes to various questions of risk.

Making Tax Simple

Taxation in the UK is overly complex, which has a negative impact on productivity. Despite the efforts of successive governments to streamline the tax landscape, business owners still spend too long preparing and filing their taxes, or feel obliged to pay specialists to handle them instead.

In Making Tax Simple, published in partnership with Enterprise Nation and Intuit, we take a closer look at the tax system business owners face – paying particular attention to how digital tools can pay dividends for both them and the government.

Operation Innovation: How to make society richer, healthier and happier

The effect of accumulated innovations has transformed the world at a pace that would have been unimaginable to our not-so-distant ancestors. Thanks to the contributions of just a few thousand innovators, society is now far richer, and better equipped to tackle pressing problems – from climate change or pandemics.

This new essay collection outlines some of the fundamental building blocks to achieving an innovative economy – including how to effectively fund research, how to properly regulate emerging industries, how to make it easier to start and scale businesses, and how to raise the status of innovating.

APPG for Entrepreneurship: Supporting SMEs Successfully

There is a renewed focus to grow the economy at a faster rate. Achieving this will require many changes to be made, but returning productivity growth to historic trends will be essential. Within this puzzle, attention will need to be paid to small businesses in particular – which evidence suggests have dragged on overall productivity in recent years.

In Supporting SMEs Successfully, a new report published by the APPG for Entrepreneurship, we assess some of the current government support programmes for SMEs to boost their productivity. Our central finding is that while existing interventions are well intentioned, and in many cases working well for the businesses using them, more could still be done to ensure they are as effective as possible.

Access All Areas: Government

Government bodies account for over a tenth of all spending in the economy. Their procurement budgets therefore represent lucrative opportunities for businesses large and small alike. Despite the enthusiasm towards them, the government often struggles to adequately support smaller businesses throughout the procurement process – with only 10% of total government spending ultimately going to SMEs. 

In Access All Areas: Government, published with Enterprise Nation, Aria Babu and Emma Jones look at the barriers SMEs face when trying to sell to the government, and how they might be tackled. Recommendations they make include writing tenders in a way which allows for more innovation from suppliers, working to connect SMEs with previously successful bidders, and better signposting of upcoming procurement to increase certainty over the pipeline of opportunities an SME could bid for.

Procurement and Innovation

For years, the government has stressed its commitment to helping SMEs succeed. One of the ways in which it does this most obviously is through the money it directly spends on them when procuring goods and services. However, as Chris Haley, Sam Dumitriu, and Aria Babu explain in a new report, under the status quo, the government makes it hard for SMEs and startups to compete with large incumbents, even when they have a better product. 

In Procurement and Innovation, the authors outline what challenges SMEs currently face when bidding for government contracts, before making a series of recommendations on how to mitigate such issues.

Knocking Down Barriers: Empowering business builders in the UK’s most deprived communities

New business creation will play a vital role in the post-pandemic economic recovery and the wider levelling up agenda. It also represents a powerful opportunity to strengthen and support people in some of Britain’s most deprived communities and increase their earnings through more fulfilling work.

In Knocking Down Barriers, we surveyed people in some of Newcastle and London’s most deprived areas. While we found no shortage of entrepreneurial potential, we did identify financial and confidence barriers to success – and recommend the government focuses its attention on helping people to overcome these.

Resilience and Recovery

COVID-19 has posed significant challenges to most companies, but our new analysis of data from Beauhurst indicates that female-led, high-growth companies have been disproportionately impacted throughout the pandemic. However, despite this impact, more than 60% of female-founded, equity-backed businesses are now operating with minimal disruption to their business, showing that female-led businesses are fighting back.

Resilience and Recovery, a new report from The Entrepreneurs Network produced in partnership with Barclays, combines discussions with female founders and original data analysis, to identify the reasons why female entrepreneurs have been disproportionately impacted by the COVID-19 pandemic.

The Case for Remote Work

In the midst of the COVID-19 pandemic, the case for short-term remote work is obvious. But the case for long-term remote work is also much stronger than is typically thought. Remote work allows firms to hire from outside their local labour market, which may mean they can employ more productive workers, and the benefits of workers clustering together have shrunk or disappeared entirely. 

The Case for Remote Work, written by Matt Clancy, assesses the evidence base around remote working, before suggesting a handful of policies which governments could implement to capture the benefits posed by a greater shift to remote working.

Upgrade

Digital technology has enabled businesses to continue trading in the most difficult of circumstances. As the UK economy recovers and reopens, increasing the rate of digital adoption by SMEs will be vital.

Although Britain is a world-leader in innovation, too often best practices are not spreading to all SMEs. In Upgrade, we argue that poor take-up of digital technologies by small businesses is a central element in our pre-COVID productivity crisis, and that increasing uptake will be vital to the economic recovery. We also quantify the £16.6bn cost to the UK economy of this digital gap and show what closing that gap would mean in terms of increased productivity.

Cashing Out

New technologies mean it has never been easier to avoid having to use cash, and the transition to a ‘cashless economy’ presents interesting opportunities – for individuals, businesses and the government. But parts of the press have decried the thought of cash vanishing from daily life, and in certain places around the world, attempts to slow the move away from cash are gaining traction. 

In Cashing Out, Fred de Fossard looks at the rise of cashless commerce, argues that politicians should embrace the phenomenon, and recommends efforts to enable going cashless would be a better way to allay any existing fears around a cashless economy. 

Job Creators

Immigration is critical to the success of the UK. While just 14% of UK residents are foreign-born, 49% of the UK’s fastest-growing businesses have at least one foreign-born co-founder. These dynamic, innovative businesses bestow jobs and growth opportunities, and are vital to the strength of Britain’s economy. 

In Job Creators, Sam Dumitriu and Amelia Stewart analyse Britain’s fast-growing, immigrant-founded companies, and suggest a handful of visa reforms to allow the UK to retain its status as a top destination for entrepreneurial talent.

Management Matters

Too often, viable companies fail due to bad management, even when the fundamental idea behind the business is sound. Good management, however, is linked to stronger productivity, faster revenue and employment growth, and a higher chance of firm survival. Improving the management of Britain’s businesses is no small matter – evidence suggests that management explains nearly a third of the gap between the top and bottom performing 10% of companies in the UK.

In Management Matters, Sam Dumitriu recommends practical reforms, including tax breaks for self-funded work-related training, to encourage greater investment in management capability to reduce the rate of unnecessary business failure.

APPG for Entrepreneurship: Enterprise Education

To thrive in the modern world, Britain’s next generation must be adaptable to change. Up until relatively recently, a job for life was both possible and preferable. It’s increasingly neither. Universities have been central to many of the great intellectual revolutions across history – now they must embrace enterprise education to imbue students with the necessary enterprising skills to flourish in the twenty-first century.

Government has a role to play. Political action — or inaction — has significant repercussions for how enterprise education is delivered. This report aims to inform the government about the successes, challenges and opportunities for delivering enterprise education at universities. Its recommendations are based on responses to a Call for Evidence and aim to work with the grain of the latest thinking and practice.

Human Capital and Business Stay-Up

In recent decades, governments worldwide have employed an array of different policy tools to try to increase start-up rates in their countries, but relatively little attention has been paid to how to support ‘business stay-up’. In that it is among the fastest growing small businesses that employment growth, innovation and productivity gains are strongest, this lag in the progress of entrepreneurship policy should give us cause for concern.

Of those approaches to supporting business sustainability that have been tried, efforts to improve management practices have shown promise. This report adds to a growing body of evidence in this area, new research supporting the importance of human capital to entrepreneurial outcomes.

Author Gabriel Heller Sahlgren’s research substantiates a relationship between business owners’ specific areas of qualification and the growth of their enterprise. Moreover, and more importantly, he further finds that not all areas of qualification are equal in terms of stimulating success. The training obtained through programmes in business, social science, and law, and in technical areas, such as engineering, appear to lead to employee growth – whereas programmes relating to other subject areas do not.

Accordingly the author argues that governments should seek ways to incentivise training in high impact areas, and in management skills specifically. The most promising approaches, he finds, appear to focus on task-related training, in both an operational and specific sense. To maximise the probability of firm success, owners must therefore learn the operational skills of organisation and management, while at the same time keep up-to-date with the latest developments in the field in which they operate.