Julie Deane’s review of self-employment is most welcome but the onus is now on the government to step up and support the nation’s entrepreneurs
The self-employed undoubtedly represent an ever-growing proportion of the UK workforce, which is why it is important that government policy brings these workers into the fore. It isn’t just about promoting flexibility for today’s remote and agile workers; it is about fostering growth for entrepreneurs.
Julie Deane, founder of Cambridge Satchel Company, recently published her Self-employment review, which highlights that there are now 4.6 million self-employed people in the UK, representing 15% of the UK workforce. Technology is identified as a driving force behind this and explains why 70% of all new businesses start off at home. Interestingly, over half of current businesses are home-based and the review also found those who are currently self-employed have no plans to return to employment.
As part of the review, Deane spent time talking with the self-employed and representative organisations. She found a range of reasons for people starting their own business but the top reason was the freedom, flexibility and independence that being self-employed offered them, compared to working for someone else.
Despite the increasing availability of advice and support for startups, small businesses and the self-employed, it remains a challenge for government to get the right support to the right businesses at the right time. The review found that the most frequently mentioned sources of information were business and trade associations, local authorities and HM Revenue and Customs. But it also identified advice gaps in areas such as cash flow, bookkeeping and record keeping. Tax returns, practical advice on running a business and an understanding of the pros and cons of being self-employed were also cited as areas where more support is needed.
The report went on to highlight some issues that you might wrestle with if you are self-employed, with concerns including “not getting paid if I fall ill” and “not being able to save enough for the future”. It suggests that some of these issues are an inherent part of the nature of being self-employed that you need to accept when making the decision to work for yourself. It also considers the issue of volatility of income, which is the major stumbling block of self-employment. If you are self-employed there will be periods of little or no income, particularly during the startup phase when you are still establishing your reputation and contacts, and may not have a clear idea of how best to market yourself or your products. Therefore, you must ask yourself whether the business you are considering will support yourself and your family. You should look at potential sales and net profits, initial set-up costs and cash flow, as well as the finance that’s available to establish the business. Financial projections will also mean you can create targets to monitor the performance of the business.
The last chapter of the report revealed that 52% of respondents plan to grow their business, with 48% saying they had no plans to expand. Of those who said they plan to grow, 29% said they would do this by increasing workload and taking on additional clients; 15% said they would be diversifying their goods and services; and 11% are looking to boost their marketing and communications. Deane expressed concern that of those planning to expand and grow, only 7% planned to do so through innovation and new idea, and even fewer (4%) said they were considering exporting as a way to grow their business.
There is no doubt that the UK is experiencing a surge in entrepreneurship, coinciding with record numbers of self-employed. While responsibility for business success or failure ultimately rests with the entrepreneur, the government can play a strategic role to help businesses in their journey from startup to scaleup.
Home-based businesses should be front and centre of government efforts to boost growth across the UK, especially when it comes to devolution and deregulation. Local Enterprise Partnerships and Growth Hubs should provide greater visibility to home-based businesses by bringing them into the local business networks and giving them access to the opportunities that devolution will bring. It will also bring spending power to local communities, particularly those that are less economically well-developed.