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Dr Phillip Lee MP: The Autumn Statement must give small businesses confidence - not just cash

Lee PhilipDr Phillip Lee is MP for Bracknell and a member of the Energy & Climate Change Select Committee. Follow Phillip on Twitter.

With the notable exception of some banks, most businesses have coped remarkably well with the current economic turmoil. Yes, it’s true that a low growth environment maybe the new normal, but it is testimony to their ingenuity that so many balance sheets remain relatively healthy. What is clear, though, is that businesses are now being called upon to shoulder the burden of the growth creation needed to pay our debts. In response to the government's 'call to arms', across our country thousands of SME’s have been changing what they do and how they do it, in an effort to secure increasing returns.

Fortunately for Britain, change is what our successful businesses do best. Unlike governments, they are able to identify problems and fix them without having to worry about so-called “public opinion” or a never ending list of vested interests. If costs are too high they are cut. If the market demands a new solution, it’s delivered. The process of moving businesses forward can be brutal but, ultimately, everyone benefits from an economy populated with lean, flexible enterprises more able to adjust to whatever the global economy has to throw at them. That is why protecting and enhancing Britain's business environment has become so essential.

Working for yourself, having enough money to do all the things you want to do and no debts are dreams of many. Being from a family which runs small businesses, I know the reality of building one that delivers profit year after year is, however, quite a different process to what many perceive. With it comes risk, stress and problems. Some people literally lay down their lives trying to build a business. There are few, if any, short cuts. It's just tough. Hardly any businesses have guaranteed sales. Most battle to hit targets 'month by month' as, because of increased customer choice, trade is now much more fluid than before.

But whilst sales are often volatile and difficult to predict, expensive government red tape remains.To avoid these growth restrictions, business is not hiring expensive indigenous staff with a penchant for spurious legal claims under burdensome employment law. Taking on young people, many of whom need rehabilitation after a state education, and employing women of child-bearing age, also represent significant commercial risks. Accepting these realities may explain why many people now describe themselves as contractors or freelancers. It is also why an increasing number of businesses use social networking as a key tool for creating a human resources pool to use when needed. These are not good developments for Westminster policymakers who dream of the private sector employing former public sector workers. Evidence in the real world is against them.

Set against this backdrop of economic uncertainty, other trends are emerging. Many entrepreneurs are not borrowing to grow their businesses. Established operations have rushed to pay down debt and adjusted their plans to phase out dangerous, 'debt equals growth' models. But, maybe more significantly for the future, a new generation of wealth creators has come to market with a different attitude. What they crave is knowledge, not an overdraft. And with that change of mindset come fresh perspectives with important ramifications. Who needs a company car when you can hire one by the hour? Who needs to fly to New York when attendees can all meet together on-line for a few dollars? Why own an office?

For evidence of this change, come to Bracknell and witness the number of empty offices. From low cost, web-based software services to flexible office packages and the creative use of outsourcing, it's now possible for anyone to construct a professional, scalable operation quickly and cost effectively. Who wants overheads? Add into that the increasing ease at which prices can be compared and international supplier networks created, and you have a very different set of rules for the game. This new model army of entrepreneurs is doing a lot more with a lot less.

Governments need to recognise the significance of their approach. Technology has empowered even the smallest of going concerns with a comprehensive set of tools to monitor and forecast performance in ways previously unimaginable. Armed with better information, businessmen and women now seek flexibility to expand and contract at short notice. Hence, they require an infrastructure able to respond quickly to new opportunities, or to 'call time' on poor performance. This creates an urgent need for simplification of employment law, the tax code and pensions. For sure, countries that fail to recognise this new reality are destined for economic decline.

To some this image of a chaotic, splintered economy unable to guarantee anything to anyone is hell on earth. Actually, I would argue that there is more wealth and security for all in a system built on genuine value, as opposed to subsidised underachievement. Britain needs tough and prudent wealth generators who are in it for the long haul. Previously, too many people have talked this game; not enough have played it. To develop these real players we need mentors, for mentoring is the best way to develop high-quality business leaders. Because how we distribute experience and expertise is crucial. We have some of the brightest business minds on the planet and yet many enterprises still fail due to rudimentary management mistakes.

So, I say to our best medium-sized and large business owners, don’t give your cash away. Instead, give your time to the next generation of British businesses. Your expertise will go much further than your wealth and you may well learn a useful lesson or two in the process. My central point to government is this - don’t just give business short-term cash, give it knowledge and address the wider social and economic issues to give it confidence that the country is on the right track. Within such a realistic and optimistic environment, sustainable businesses can flourish and our country's books will be balanced.


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