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.

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.

Access All Areas: Older workers

As well as being a health crisis, the Covid-19 pandemic also posed immense challenges for jobs and the wider economy. One area where this has had long-lasting consequences is in terms of the number of pre-retirement age older people who fell out of the labour market and still remain economically inactive.

In Access All Areas: Older workers, the latest in our series of reports with Enterprise Nation, we examine the causes, consequences and solutions to this stubborn problem — making recommendations to government and businesses alike on how they can get more older people into work and entrepreneurship.

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.

Access All Areas: People

Job vacancies have spiked in the aftermath of Covid-19, and many small businesses struggle to recruit the skills they need. New technological trends, such as the advent of AI, will also disrupt the labour market, and employers and employees need to be prepared for this – so that it is an opportunity to grasp, rather than a threat to avoid.

In Access All Areas: People, we make a series of recommendations to boost the supply and quality of labour force, including reducing the cost of visas, reforming the Apprenticeship Levy, and widening the scope of tax breaks for training.

Tomorrow's Entrepreneurs

Attitudes towards entrepreneurship have shifted. Increasingly, young people see entrepreneurship as a way of changing the world instead of simply a way of making money. In Tomorrow’s Entrepreneurs, we surveyed young founders – finding, among other things, that the more money a business turns over, the more likely they are to agree that their primary aim was to tackle a social or environmental problem.

The report, published in partnership with Youth Business International, concludes with a series of recommendations on how to better support young entrepreneurs, including broader use of Challenge Prizes and Advanced Market Commitments for innovative solutions to big problems, and bringing back the Enterprise Allowance Scheme to help young entrepreneurs start their own businesses.

APPG for Entrepreneurship: Entrepreneurship Education

How can we equip young people with the skills to succeed in a fast-changing world of work? Entrepreneurship Education, a new paper by Finn Conway for the APPG for Entrepreneurship, explains the benefits of teaching young people how to start and grow a business. The report reveals that while young people have a huge desire to work for themselves, entrepreneurship education in schools is not integrated into the curriculum.

The report calls on the government to develop and publish a Youth Entrepreneurship Strategy for Schools, which would set out key skills it wants young people to develop, and to provide funding to encourage entrepreneurs from more representative backgrounds to visit and engage with schools.

Inspiring Innovation

In Inspiring Innovation, the latest Female Founders Forum report produced in partnership with Barclays, Aria Babu looks at female entrepreneurship in the high-growth sectors such as e-commerce, fintech, and greentech.

She makes three broad recommendations for boosting female entrepreneurship, namely: closing the gender funding gap, which currently sees female founders raising only 15% of all equity finance; tackling STEM drop-off rates, which have resulted in just 17% of tech workers being women; and providing more female role models, given that mentorship has proven to be an effective way of encouraging women to start and scale businesses.

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.

Educating Future Founders

Entrepreneurship education has traditionally taken place at universities, but there is strong evidence that earlier interventions can develop non-cognitive skills that are key to entrepreneurial success, such as creativity, persistence, and communication.

In Educating Future Founders, we recommend that governments invest in randomised control trials to gather evidence on interventions to boost entrepreneurship, and use the results to promote entrepreneurship education at a secondary level.

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.

Future Founders

In Future Founders, we set out to understand how young people think about entrepreneurship. Through polling of 14-25 year olds, we gained an insight into the aspirations, intentions, and motivations of the next generation of potential entrepreneurs. We found that over half have thought about, or already have, started a business – and only 15% said they had no intention of starting one. We also found that respondents who have a friend or family member who have started a business are more likely to do the same – suggesting that exposure to entrepreneurship is infectious. 

The results of our polling allow us to conclude that the ability to solve social problems might be a more persuasive reason to start a business than getting rich quickly, that more needs to be done to promote relatable entrepreneurial role models, and that simply not knowing where to start remains the single biggest barrier to founding a business.

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.